Morning business news - February 24

Monday 24 February 2014 10.42
Morning business news with Brian Finn
Morning business news with Brian Finn

Aer Lingus has reported operating profits of €61.1m for 2013. The figure was in line with its stated guidance, but was lower that the €69m reported last year. Aer Lingus chief executive Christoph Mueller described 2013 as a year of "two halves and two networks", with a strong first half on the short-haul and long-haul markets. The second half was characterised by a strong long-haul market, but with weakness in the short-haul sector.

"With the hot summer season, people didn't take last minute flights. In the third and fourth quarters, competitive pricing left its mark. The market was not growing," he said.

Mr also said he was not aware of legal action being threatened against the unions who are threatening to go on strike at the airline over pensions. Reports on Friday said the airline had written to SIPTU to warn it that the company could take all steps, including legal action, to prevent industrial action. Mr Mueller said he was not aware of "speculation of that nature". 

The Aer Lingus CEO said industrial action was not the right course of action to bring the pensions issue to a satisfactory conclusion and that a solution could only be brokered at the negotiating table. "We have so many different parties, I have doubts about whether a parliamentary solution can be found. Even if that is not the case, a strike is not accelerating that process," he said.

The airline said today that it was targeting cost reductions of €30m through its CORE programme including further headcount reductions. "We have an oversubscribed voluntary redundancy scheme which cannot be executed without having a pension solution. But that's only one element. Progress with processes will allow us come up with a leaner solution within the airline," Mr Mueller stated.

***
Insulation and building solutions group, Kingspan, has reported full year results pretty much in line with analyst expectations driven largely by a strong performance in the second half.  Sales were up 10% to €1.79 billion with a trading profit of just under €123m - up 14%.

Kingspan's chief executive Gene Murtagh said that the results were driven by stronger momentum in the second half of the year after a slow start to 2013. He said the Irish market - while not a huge market for the company any more - had an excellent performance and saw its strongest result in six or seven years. He said the UK - where Kingspan generates about 34% of its revenue - saw improved economic stability and sentiment, but reported a more patchy performance in North America and Germany during the year. The severe winter weather last year hit Kingspan's operations but Mr Murtagh says that despite the wet weather so far this year, the weather is acting in the company's favour.

***
MORNING BRIEFS -  An online company that helps SMEs win public sector contracts has estimated that more than 80% of public sector contracts are awarded with no information supplied on winners or the amount involved. Tenderscout, in its results for 2013, says one in 10 SMEs actually tendered for public sector contracts last year, despite €12 billion worth being made available. The results show that the HSE awards the most contracts. The largest awarded last year was worth €30m - it was to a construction company and was awarded by the Dublin Airport Authority.

*** The Irish Hotels Federation is calling for a reduction in local rates saying the high cost of business is the single most pressing issue facing the industry. The IHF has its annual conference today at which it will report a 1% increase in room occupancy rates in 2013. The increase was driven by an upsurge in overseas visitors here last year but the Federation points out that growth potential was held back by subdued consumer demand from the home market.

*** Online tv streaming service Netflix has agreed a deal with Comcast, the biggest internet service provider in the US, that will see its content streamed faster and more smoothly. The deal will see Netflix servers connected directly to Comcast's network, removing third parties that slow down streaming speeds. No financial details of the deal